Dividing Marital Wealth in a Community Property State

An important part of resolving property division in a divorce is determining what is community property and what is separate property.

Property Division During a Texas Divorce
In Texas divorces, the rules of "community property" govern division of property and assets accumulated during the marriage. Stated in a summary fashion, the rules of community property state that all property accumulated during a marriage is presumed to be community property — to be divided equally in a divorce.

Non-community property (often referred to as separate property) is generally anything that a spouse owned prior to the marriage. Non-community property may also include some assets acquired during the marriage — such as a bequest to one spouse or a lawsuit settlement that the spouse kept separate from the marital estate.

Property Division Has Long-Term Consequences, No Matter Your Level of Assets
Negotiating property division during a divorce should never be taken lightly, even in a marriage where the spouses have few assets. Just as marital assets must be equally divided according to Texas's property division rules, debts acquired during the marriage must also be divided equally between the spouses. Property division negotiations often blend into negotiations about Spousal Support as well. For example, "you can keep the house and I'll still pay half the mortgage, but I won't pay any additional alimony."

Community Property in Texas
Different states have different laws which govern how marital property and assets are divided in a divorce. In community property states, all property purchased during the marriage, and all wealth and assets accumulated during the marriage are community property. Community property (also referred to as marital property) is divided equally between the husband and wife in the event of a divorce . In equitable distribution states, the marital estate is not necessarily divided equally, but is divided fairly based upon many factors.

Texas is a community property state. This means that, in most cases, all property acquired by either spouse during the marriage will be divided equally in a divorce. It doesn't matter whose name is on the title to the house or the stock certificate. If the house or stock was purchased after the couple married, it is presumed to be community property — and subject to equal division.

Property which was owned or inherited prior to the marriage is considered separate property and is not subject to division in a divorce. Property is presumed to be community property, unless you can show that the asset was yours before marriage, or was purchased with money you had prior to getting married.

Separate Property
When separate property (also referred to as non-marital property) gets commingled in a joint account, or is used to purchase a house, it can be tricky to prove that the property is still separate property. Our attorneys know how to work with financial experts to trace separate property. Using receipts, deposit and withdrawal records, account statements, and other financial documents, it is possible to trace separate property so that it is not subject to division in the divorce.

Increase in Value of Separate Property Due to Spouse's Contribution
Another common scenario in property division involves a business or professional practice which was owned prior to the marriage. In some cases, the other spouse may have a claim that the increased value of the business is due, at least in part, to his or her contributions of time, tools and talent.

For example, a business may have increased in value because of the other spouse's input of raising kids, taking care of the home, doing the bookkeeping etc. By obtaining a current business valuation and comparing it with the value of the business at the time of marriage, you can calculate how much the business value has increased during the marriage. In these types of complicated cases, you almost always need a forensic accountant to help delineate what reimbursement is due for economic contributions by the other spouse.

Contact the Flowers Firm to assist with property division issues. Contact us at (713) 236-7796 to schedule an appointment with one of our skilled attorneys at our office in downtown Houston.